15 March 2018
Altice N.V. - FY 2017 and Q4 2017
Pro Forma[1] Results
· Following
recent changes to management and strategy, Altice Europe is already
starting to see the benefits of intensifying operational focus to
improve customer service and drive better subscriber figures with
further significant progress expected from Q1 2018:
o France B2C mobile postpaid
customer base increased by +80k net additions in Q4 2017 (+199k in
FY 2017), the best quarterly performance in two years, and a
significant improvement compared to last year (vs. +33k in Q4
2016);
o France fiber customer net
additions were also the best in two years, reaching +69k in Q4 2017
(+193k in FY 2017), supported by improved processes, more
attractive offers and new retention policies (vs. +54k in Q4 2016).
Total fixed B2C customer base trends improved both compared to the
prior year and the prior quarter, reporting -45k net losses in Q4
with continuous significant monthly improvements throughout the
quarter (-171k in FY 2017 and vs. -61k in Q4 2016).
o Portugal fiber customer net
additions in Q4 2017 of +43k were the highest ever (+142k in FY
2017 and vs. +29k in Q4 2016), supported by the rapid expansion of
fiber coverage. Significant reduction in churn in the total fixed
B2C customer base to the lowest ever level below 10% by the end of
2017 with net additions in Q4 of +6k (-45k net losses in FY 2017
and vs. -25k in Q4 2016), representing the best quarterly
performance in 5 years. Leadership in TV customer acquisition for
the first time in 4 years.
· Altice N.V.
Group revenue growth and margin expansion driven by strong Altice
USA performance:
o Altice N.V. Group revenue
growth of +0.6% YoY growth on a constant currency (CC) basis in FY
2017 (-0.6% growth YoY in Q4 2017) pre-separation ('split') of
Altice USA[2], in line
with guidance;
o Altice Europe post-split
revenue decline of -0.5% YoY on a CC basis in FY 2017 (-1.4% YoY in
Q4 2017). Revenue growth in Israel of 3.7% on a CC basis offset by
France revenue declining -1.6%, Portugal declining -1.1% and
Dominican Republic declining -0.5% in FY 2017;
o Altice USA revenue growth of
+3.2% YoY on a CC basis in FY 2017 (+2.6% YoY in Q4 2017).
· Altice N.V.
Group Adjusted EBITDA[3] grew +6.4%
on a CC basis in FY 2017 pre-split, in line with guidance, and
driven by the strong growth of Altice USA +19.7% in FY 2017 on a CC
basis under IFRS:
o Altice N.V. Group Adjusted
EBITDA margin pre-split increased by +2.1 percentage points YoY to
40.1% in FY 2017 (vs. 37.9% in FY 2016);
o Altice Europe post-split
EBITDA margin was 39.3% in FY 2017 (+0.2% pts vs. 39.1% in FY
2016). France margin increased +1.7% pts to 39.3% and Israel margin
increased +0.6% pts to 45.8%, offset by Portugal margin decreasing
-2.8% pts to 46.5% and Dominican Republic margin decreasing -0.8%
pts to 55.9% in FY 2017;
o Altice USA reached an Adjusted
EBITDA margin of 43.5% in FY 2017 (+6.0% pts vs. 37.5% in FY
2016).
· Altice N.V.
Group Operating Free Cash Flow[4] grew +13.4%
on a CC basis in FY 2017[5] pre-split,
driven by the strong growth of Altice USA +28.1% on a CC basis
under IFRS, and Israel +70.8% on a CC basis. Altice Europe
post-split OpFCF grew +1.3% on a CC basis in FY 20175.
· Significant
investment in networks and innovative new services with total
capital expenditures for Altice N.V Group of €4.0bn in FY
2017[6], in line
with guidance:
o Leading fiber[7] operator in
France reaching nearly 11 million homes passed (including
acceleration in FTTH homes passed) and fastest 4G mobile network
deployment in 2017[8];
o Leading fiber (FTTH) operator
in Portugal reaching over 4 million homes passed in 2017 (on track
for nationwide coverage target) and new partnerships for NR 5G NSA
services;
o Altice USA's fiber-to-the-home
(FTTH) deployment accelerating, with the first homes to be
commercialized later this year, and new full MVNO agreement to
deploy mobile services by 2019;
o Altice USA's new entertainment
platform, Altice One, became available across the full Optimum
footprint in January 2018; in Portugal in March 2018, MEO launched
a new entertainment platform, Sofia, including a new user interface
and a state-of-the-art new wireless video set top box.
· Rapid growth
in media and advertising businesses; NextRadioTV record revenue
growth (+25% in FY 2017) and audience market share gains, record
revenue growth at Teads (+50% in FY 2017), strong growth at Altice
USA's Data and Advertising business (+4% in FY 2017), and further
expansion with Media Capital acquisition[9].
· Executing on
non-core asset disposal program to strengthen the company's
long-term balance sheet position:
o Completed sale of
telecommunications solutions business and Data Center operations in
Switzerland;
o Entered exclusivity to sell
international wholesale voice carrier business in France, Portugal
and the Dominican Republic;
o Dominican Republic - strong
position in an attractive market - process underway;
o French and Portuguese towers -
largest portfolio to ever come to market in Europe - process
underway for c.10k French sites and c.3k Portuguese sites;
o Signing targeted in H1
2018.
· Further
strengthening and simplification of diversified capital
structure.
Dexter Goei, President of the
Board of Altice N.V., said: "After several
years of acquisitions, 2017 was the year of integration and
execution, with an ongoing focus on making our customer experience
better. As well as accelerated investment into upgrading our fixed
and mobile networks for better quality services, Altice rapidly
expanded its media and advertising businesses as new areas of
growth. In parallel, Altice has taken important steps to simplify
the group and separate the business into a European and US group
with distinct strategies.
Altice Europe has tremendous
opportunities as we deliver on our operational aspirations, led by
new management reporting to Altice founder Patrick Drahi. At the
core of our strategy is the operational and financial turnaround in
France and Portugal.
Altice USA sees exciting
opportunities in the US market. We continued to have great momentum
in 2017 and delivered strong financial results by growing our
customer base, revenues and margins with high free cash flow
growth.
In 2018 and beyond, we will
remain very focused on investing for growth in innovation, superior
service and advanced networks to deliver a more robust and
differentiated product portfolio to meet customers' needs."
March 15, 2018:
Altice N.V. (Euronext: ATC NA and ATCB NA), today announces
financial and operating results for the quarter ended December 31,
2017.
2018 Guidance[10]
For the full year 2018, Altice Europe (post-split)
on the new perimeter is expected to generate operating free cash
flow of €2.4 to €2.6 billion, excluding the Altice TV segment. As
previously announced, Altice France is expected to generate
operating free cash flow of €1.6 to €1.7 billion, which includes
c.€300 million of annual pay TV content expenses and reflects
c.€200 million of revenue drag related to changes to the value
added tax law in France.
For the full year 2018 Altice USA
expects:
-
Revenue growth c.2.5-3.0% YoY;
-
To increase investment for the continued rollout
of Altice One, fiber (FTTH) deployment, and new MVNO network
investment keeping with annual capex ~$1.3bn.
Altice Europe and Altice USA reiterate plans to expand Adjusted
EBITDA and cash flow margins over the medium- to long-term.
Altice Reorganization Including
Altice USA Separation ('Spin-Off' or 'Split')
On January 8, 2018, Altice N.V. announced that its
Board of Directors approved plans for the separation ('split') of
Altice USA Inc. from Altice N.V. (which will be renamed "Altice
Europe") to be effected by a spin-off of Altice N.V.'s 67.2%
interest in Altice USA through a distribution in kind to Altice
N.V. shareholders[11]. The
separation will enable each business to focus more on the distinct
opportunities for value creation in their respective markets and
ensure greater transparency for investors. The proposed transaction
is designed to create simplified, independent and more focused US
and European operations to the benefit of their respective
customers, employees, investors and other stakeholders. Following
this proposed transaction, the two companies will be led by
separate management teams. Patrick Drahi, founder of Altice, will
retain control of both companies through Next[12] and
is committed to long-term ownership. Post-separation, Mr. Drahi
will serve as President of the Board of Altice Europe and Chairman
of the Board of Altice USA. Altice N.V. aims to complete the
proposed spin-off transaction by the end of the second quarter 2018
following regulatory and Altice N.V. shareholder approvals.
In the spirit of enhanced accountability and
transparency, Altice N.V. also announced on January 8, 2018, that
Altice Europe will reorganize its structure comprising Altice
France (including French Overseas Territories), Altice
International and a newly formed Altice TV subsidiary. This
includes integrating Altice's support services businesses into
their respective markets and bundling Altice Europe's premium
content activities into one separately funded operating unit with
its own P&L.
Following the announcement of the spin-off of Altice USA, Altice
N.V.'s ownership of Altice Technical Services US has been
transferred to Altice USA for a nominal consideration as previously
announced. In addition, Altice USA is in the process of
transferring Altice N.V.'s ownership of i24 US and i24 Europe for a
small consideration.
On January 16, 2018, CSC Holdings, LLC announced
the pricing of an offering of $1.0 billion in aggregate principal
amount of its 10-year Senior Guaranteed Notes due 2028 (bearing an
interest rate of 5.375%). CSC Holdings, LLC also announced the
pricing and allocation of a new $1.5 billion incremental 8-year
term loan facility under its existing credit agreement, maturing in
January 2026 (priced at 99.50 with interest at a rate equal to
LIBOR +2.5%). The proceeds of the senior guaranteed notes and term
loans were used to refinance existing borrowings of CSC Holdings,
LLC and Cablevision Systems Corporation ("Cablevision"), namely the
$300 million 7.875% February 2018 maturity and the $750 million
7.75% April 2018 maturity, and will be used to fund a dividend of
$1.5 billion expected to be paid to Altice USA stockholders
immediately prior to the separation from Altice N.V. expected to
become effective in the second quarter of 2018. Following this
refinancing Altice USA's weighted average cost of debt reduced to
6.2% from 6.4% previously.
Other Significant Events
-
On March 12, 2018, Altice N.V. announced it had
entered into exclusivity with Tofane Global, a Paris-based
telecommunications and digital player specializing in international
carrier services, for the sale of its international wholesale voice
carrier business in France, Portugal and Dominican
Republic.
-
On December 13, 2017, Altice USA, Charter
Communications and Comcast Cable announced a preliminary agreement
to form a new Interconnect in the New York market that will provide
a one-stop advertising solution to reach more than 6.2 million
households across the New York DMA. For marketers, agencies and
advertisers, the new Interconnect will provide an enhanced way to
strategically reach audiences across TV and digital
platforms.
-
On December 1, 2017, Altice N.V. announced it
had entered into an agreement to sell its telecommunications
solutions business and Data Center operations in Switzerland,
green.ch AG and Green Datacenter AG, to InfraVia Capital Partners.
The transaction valued the business at an enterprise value of
approximately 214 million CHF (9.9x LTM Adjusted EBITDA) and closed
on February 12, 2018.
-
On November 5, 2017, Altice USA and Sprint
announced a new multi-year strategic agreement under which Altice
USA will utilize Sprint's network to provide mobile voice and data
services to its customers throughout the nation. In this agreement,
the first of its kind, Sprint will provide Altice USA with access
to its full MVNO model, allowing Altice USA to connect its network
to the Sprint Nationwide network and have control over the Altice
USA mobile features, functionality, and customer experience. Altice
USA's plans with Sprint are moving forward, developing the core
network in 2018, and a commercial launch of a mobile service for
Altice USA customers is expected by 2019.
Contacts
Head of Investor
Relations
Nick Brown: +41 79 720 1503 / nick.brown@altice.net
Head of
Communications
Arthur Dreyfuss: +41 79 946 4931 / arthur.dreyfuss@altice.net
Conference call details
The company will host a conference call and webcast tomorrow,
Friday 16th of March 2018 at 3:00pm CET (2:00pm UK time, 10:00am
EDT) to discuss the results.
Dial-in Access telephone numbers:
Participant Toll Free Dial-In Number: +1 (866) 393-4306
Participant International Dial-In Number: +1 (734)
385-2616
Conference ID 3698209
A live webcast of the presentation will be available on the
following website:
https://event.on24.com/wcc/r/1602760/FE9B16CA163BCDEC7355ED6915748126
The presentation for the conference call will be
made available prior to the call on our investor relations
website:
http://altice.net/investor-relations
About Altice
Founded in 2001 by entrepreneur Patrick Drahi,
Altice is a convergent global leader in telecoms, content, media,
entertainment and advertising. Altice delivers innovative,
customer-centric products and solutions that connect and unlock the
limitless potential of its over 50 million customers over fiber
networks and mobile broadband. The company enables millions of
people to live out their passions by providing original content,
high-quality and compelling TV shows, and international, national
and local news channels. Altice delivers live broadcast premium
sports events and enables millions of customers to enjoy the most
well-known media and entertainment. Altice innovates with
technology in its Altice Labs across the world. Altice links
leading brands to audiences through premium advertising solutions.
Altice is also a global provider of enterprise digital solutions to
millions of business customers. Altice is present in 10 territories
from New York to Paris, from Tel Aviv to Lisbon, from Santo Domingo
to Geneva, from Amsterdam to Dallas. Altice (ATC & ATCB) is
listed on Euronext Amsterdam. For more information, visit
www.altice.net
[1] Financials
shown in these bullet points are pro forma defined as results of
the Altice N.V. Group as if the acquisition of Cablevision
(Optimum) had occurred on 1/1/16 (excluding Belgium &
Luxembourg and Newsday Media Group as if the disposals occurred on
1/1/16). The acquisitions of NextRadioTV and Altice Media Group
France included from 1/1/16, pro forma for the sale of press titles
within the AMG France business in April and October 2017. Segments
shown on a pro forma standalone reporting basis, Group figures
shown on a pro forma consolidated basis. Financials include the
contribution from the insourcing of Parilis and Intelcia in 2017
(for one month in Q4 2016), as well as the contribution from Teads
from Q3 2017.
[2] Altice N.V.
Group figures presented here on 'Old Perimeter' reporting in line
with previously reported results prior to the Altice reorganization
announced on January 8, 2018, including the separation ('spin-off'
or 'split') of Altice USA. From 2018 onwards, results for Altice
N.V. will be reported on the 'New Perimeter' for Altice Europe
('post-split') as defined on page 13 of this release.
[3] See
reconciliation of non-GAAP performance measures to operating profit
for the three and twelve months period ended on page 35 of this
release.
[4] Operating
Free Cash Flow defined here as Adjusted EBITDA-capex.
[5] Excluding
€413.8m of capex related to the acquisition of multi-year major
sport rights in 2016.
[6] Excluding
handset securitization / supplier financing of €200m in FY 2017, as
per guidance.
[7] FTTB and
FTTH homes passed.
[8] SFR
activated the largest number of new 4G sites in 2017.
[9] Media
Capital acquisition under regulatory process.
[10] 2018
guidance assumes the same basis as reported in these results which
does not take into account IFRS 15 accounting changes.
[11] The
distribution will exclude shares indirectly owned by Altice N.V.
through Neptune Holding US LP (3.4% assuming reference share price
of $21.23 as of 31-12-2017 for Altice USA).
[12] Next's
control of Altice USA will be exercised via some other Altice N.V.
and Altice USA shareholders being in concert with Next - together
the "Next ATUS Concert".
Altice NV: Full Year and Q4 2017
Pro Forma Results
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Altice NV via Globenewswire
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